- By an 8-1 vote, the U.S. Supreme Court ruled health plans cannot sue to recover medical expenses paid to injured beneficiaries who later win damages and then spend the money.
- The decision in Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan affects plans regulated under the Employee Retirement Income Security Act, or ERISA, which set baseline standards for plans offered by private employers.
- The decision could cause plans to lose billions of dollars and end up increasing beneficiaries’ costs, Modern Healthcare reports.
Wednesday’s near-unanimous decision stems from a 2008 drunk driving incident that left Robert Montanile seriously injured. NEIHBP, an ERISA plan, paid more than $120,000 for his medical costs and insisted that Montanile repay the money after he won a $500,000 settlement against the drunk driver in court.
Because Montanile had spent all of the money, the health plan sued to get “equitable relief” from his general assets. Under ERISA, plans are authorized to seek reimbursement from funds obtained in a settlement between the injured person and wrongdoer.
However, the Supreme Court concluded a lien against general assets doesn’t equate to equitable relief. “If a defendant dissipated the entire fund on nontraceable items, the lien was eliminated and the plaintiff could not attach the defendant’s general assets instead,” the justices’ opinion states.
For plans to recover expenditures on beneficiaries, they must obtain them from traceable funds that have been awarded in court, the court said.